What Are Bankers Thinking About These Days? Part II

Let’s go back to Louisiana State University, with a walk across the majestic campus early in the morning listening to the chimes of the bell tower and walking past the stately trees, some over 400 years old, covering the grounds.

Lenders in general who are financing the livestock industry are prepared to stick out the tough times. They were quick to admit that more financial documentation and open communication between the borrower and lender will be expected and needed. One can’t be like an ostrich and stick your head in the sand in this type of environment.

Globally, concern about government policy including the U.S. Farm Bill and its’ implications in compliance of the World Trade Organization was top of mind. Others were wary of the speculation driving up oil and commodity prices, which is distorting customers’ cash flows and profits. Livestock lenders were concerned that the rapid movement toward “green” in every component of life could drastically alter a portfolio’s risk and performance in a short period of time. With over 70% of North American agriculture having a reliance on non-farm income, a protracted deep recession could be quite devastating to an agricultural portfolio.

Finally, there was a louder drumbeat concerning people as it pertained to character, ethics, work ethics and value systems. For example, one banker cited that one of his valued customers wrote him a letter indicating he wanted to be out of debt by the end of 2008. While the customer’s intentions were good, he wanted the bank to write off $300,000 of financial obligations to reduce the pressure on his business and family. His request was denied in fairness to the other customers of the bank, which led to a temper tantrum by the customer.

This year students attending the school were reprimanded for missing class, talking on cell phones and text messaging in class. Some did not see the relevance of courses on problem loan identification and leadership courses, which were taught by outstanding lecturers. A new breed of employee will be serving the agricultural industry. While many will demonstrate old-time ethics, character and work habits, entitlement, and a “what’s in if for me” attitude is alive and well. I guess the old Crosby, Stills, Nash and Young song “Teach Your Children Well” is still applicable in today’s environment.